System will bypass investment banks...

BlackRock’s Aladdin Trading Network, which the investment firm said last year it planned to start to allow investors to bypass investment banks, will route trades through MarketAxess, the owner of an electronic bond and derivatives-trading system, the companies said in an e-mailed statement today.

“Our two firms have a long-standing relationship, complementary strengths and a shared belief that the gradual shift towards more open trading in fixed income will require broad participation from the buy side and behavioral change among investors,” Richard Prager, head of BlackRock’s trading and liquidity strategies group, said in the statement.

BlackRock Solutions’ Aladdin investment-management system, which offers access to its trading network, hosts $14 trillion in BlackRock and Aladdin client assets, and more than 1,000 asset managers, insurance companies, other investment firms and broker-dealers are active users of the MarketAxess platform, according to the statement.

“This partnership enables Aladdin clients to tap into a deeper liquidity pool without ever having to leave Aladdin, while maintaining their existing trade workflow,” Ryan Stork, global head of BlackRock’s Aladdin business, said in the statement.

‘Liquidity Pool’

Wall Street dealers traditionally act as middlemen by warehousing bonds until customers seek to buy them. That model is changing as U.S. and international rules meant to make the banking system safer have prompted dealers to cut the amount of debt they hold, reducing liquidity in the market.

BlackRock, which manages about $3.9 trillion in assets, had said last year that its bond-trading system would match clients’ orders using its own platform, rather than relying on Wall Street firms or other electronic networks to trade their bonds.